Q1 [2007] QBCCMCmr 189 (2 April 2007)

Last Updated: 16 April 2007

REFERENCE: 0029-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	34498
Name of Scheme:	Q1
Address of Scheme:	QUEENSLAND

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

John Molier, the Owner of lot 1107

I hereby order that the application for an order that the applicant be relieved from payment of $293.18 sought by the body corporate as fees incurred to recover outstanding levies Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0029-2007

"Q1" CTS 34498

Application

The applicant is the owner of lot 1107 and has sought an Order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) which will relieve him from payment of the amount of $293.18 sought by the body corporate as fees incurred to recover outstanding levies.

Background

Q1 Community Title scheme is a large residential tower on a Building Format Plan, regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997.

The applicant objects to payment of an amount of $293.18 detailed in an invoice dated 27 November 2006 as follows:

Statement Period 1 September 2005 to 27 November 2006

Date	Type	Details	Reference	Debit	Credit	Balance
08/02/06		By Laws	MOOOOO33	22		22
08/02/06		By Laws	MOOOO222	26.40		48.40
08/02/06		By Laws	MOOOO287	118.28		166.68
08/02/06		By Laws	MOOOO381	26.40		193.08
08/02/06		By Laws	MOOOO446	14.30		207.38
08/02/06		By Laws	MOOOO478	19.80		227.18
08/02/06		By Laws	MOOOO479	44		271.18
08/02/06		Receipt	ROOOOO26		22	249.18
08/02/06		By Laws	MOOOO701	22		271.18
		Balance Due				271.18

Upon receipt of an invoice for $960.96, the applicant advised the body corporate in early March 2006 that he was experiencing financial difficulties and was unable to pay body corporate contributions of $960.96 at that point in time, although he was able to pay an initial amount of $200.

The body corporate subsequently engaged a debt collection service which, on 22 March 2006, issued a notice seeking payment of $782.96, being the amount of outstanding contributions. The notice included a statement that "Unless the sum is paid within 7 days the body corporate will have no alternative but to institute legal proceedings without further reference to you".

In November 2006 the applicant received an invoice seeking payment of $293.18 in debt collection fees, and wrote to the body corporate seeking to have these fees waived. On 20 December the body corporate advised the applicant that his request had been declined.

Submissions

Pursuant to section 243 of the Act, submissions were sought from the body corporate and lot owners. Three submissions were received.

Two lot owners submitted that the applicant should pay any outstanding fees and all costs incurred in recovering the outstanding fees as otherwise the debt recovery fees would be borne by other lot owners who had paid their fees on time.

The Body Corporate made the following submissions:

• The applicant disputes payment of the outstanding amount of $293.18 being the lot owner’s costs in relation to recovery of outstanding levy contributions for lot 1007 and lot 1107.

• The body corporate has adopted clear policies regarding recovery of outstanding contributions, and cannot justify the waiver of the recovery fees as this would be at the expense of the other owners.

• Section 97 of the Body Corporate and Community Management(Accommodation Module) Regulation 1997 provides as follows:

Payment and recovery of body corporate debts
(1) If a contribution or contribution instalment is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt--
(a) the amount of the contribution or instalment;
(b) any penalty for not paying the contribution or instalment ;
(c) any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.

• On 30 September 2005 it was resolved that the body corporate would send arrears notices when levies were 30 days in arrears and recovery action would commence when levies are 60 days in arrears.

• At an EGM held on 6 April 2006 the body corporate resolved to charge penalty interest on overdue levies at the rate of 2.5% per month.

• At a body corporate committee meeting on 6 July 2006, it was resolved that that any requests for waiver of debt recovery fees or interest charged on unpaid levies, should be declined.

• The body corporate has acted in accordance with the legislation and has resolved as outlined above, to recover a body corporate debt.

• The owner should accept responsibility for debts outstanding and fulfil his obligation to the body corporate by payment of any outstanding monies.

Jurisdiction

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Determination

As a starting point the applicant’s attention is drawn to section 97 of the Body Corporate and Community Management(Accommodation Module) Regulation 1997 which provides as follows:

Payment and recovery of body corporate debts

(1) If a contribution or contribution instalment is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt--

(a) the amount of the contribution or instalment;

(b) any penalty for not paying the contribution or instalment;

(c) any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.

(2) If the amount of a contribution or contribution instalment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2 year period, start proceedings

to recover the amount.

(3) A liability to pay a body corporate debt in relation to a lot is enforceable jointly and severally against each of the following persons--

(a) a person who was the owner of the lot when the debt became payable;

(b) a person (including a mortgagee in possession) who becomes an owner of the lot before the debt is paid.

(4) If there are 2 or more co-owners of a lot, the co-owners are jointly and severally liable to pay a body corporate debt in relation to the lot.

(5) If an owner is liable for a contribution or a contribution instalment, and a penalty, an amount paid by the owner must be paid--

(a) first, towards the penalty; and

(b) second, in reduction of the outstanding contribution or instalment; and

(c) third, towards any recovery costs for the debt.

(6) If the body corporate is satisfied there are special reasons for allowing a discount of a contribution, or waiving a penalty or liability for recovery costs, the body corporate may allow the discount, or waive the penalty or costs in whole or part.

Section 97(1) of the Regulation provides that if a contribution is not paid by the due date, the body corporate may recover, as a debt, the outstanding contribution, any applicable penalty and any recovery costs reasonably incurred by the body corporate.

Clearly then, costs of recovering contributions or penalties, reasonably incurred by the body corporate, constitute a debt recoverable by the body corporate in the Magistrates Court . Obviously, the body corporate cannot characterise such costs as outstanding contributions, or offset contributions paid by an owner against these expenses. Further, the body corporate should closely monitor debt recovery costs to ensure it is able to satisfy a Magistrate that debt recovery costs have been reasonably incurred.

Order
For the above reasons, I propose to dismiss the application.